How inflation is affecting health system CIO decisions

With inflation at a more than 40-year high, CIOs are rethinking their spending to cope with the rising costs of IT supplies, services and talent. 

Below, four health system IT executives answer the question: What do CIOs need to think about in a high inflationary environment?

Note: Responses have been lightly edited for clarity

Zafar Chaudry. MD. Chief Digital and Information Officer and Senior Vice President of Seattle Children's Hospital: At Seattle Children's we have certainly seen inflationary pressures affecting our entire health system — both hardware, services and software have increased in cost up to 30 percent. 

Inflation is affecting CIOs with increasing labor costs, higher contractor costs, supply chain issues and premiums for high-demand hardware and services. CIOs will need to focus more on efficiencies versus innovation, help their health system better prioritize projects and keep a close eye on increasing technical debt. CIOs will also want to be better financial stewards, have a holistic view of the broader economic issues, understand the business impact of inflation, convey IT value and do more for less by making use of every available resource.

Jim Daly. Vice President and CIO of Washington Regional Medical System (Fayetteville, Ark.): Planning for some level of inflation is always part of the business cycle, and in past years we have been fortunate to have some level of predictability as budget decisions are made. However, with the current fast and steep rise of inflation impacting all aspects of operating and capital expense, it provides a new challenge to work within a budget where market prices change on an almost monthly basis and supply chain lags impact planning cycles.  

From a technology perspective, this results in changes to our purchasing strategies, reprioritizing our IT agenda and postponing new investments and projects. And with reimbursement not keeping pace with inflation, mid- to long-term strategic road maps must be recalibrated based on the impact to margin and availability of funding to enable new or advanced capabilities.

Jesus Delgado. CIO and Senior Vice President of Community Healthcare System (Munster, Ind.): During high inflation cycles it is imperative that CIOs strategically plan their technology and service purchases. When prices of technology assets or services increase significantly and erode purchasing power, it is critical that CIOs make investments that align closely with business objectives and value-add. What needs to be purchased? When? And is it the right time to make the investment? are all critical questions that need to be answered by the CIO. 

CIOs also need to plan in advance and prioritize where the spending in technology will be. Align the investment to the service lines that are strategic to the organization. Identify must-have technology needs and work proactively with business partners to build a pipeline of technology investments that can be funded according to financial constraints.

Jeff Gautney. Vice President and CIO of Rush University Medical Center (Chicago): On inflation, one thing that concerns me is the shift to cloud is also a shift from a capital to an operating expense. Operating expenses are usually the battleground much more so than capital in any health system or not-for-profit.

How do we make sure that the money to balance (operating expenses) doesn't get stolen from things like talent? And how do we educate the health system about that move and move in an orderly fashion so we don't blow up operating budgets and margins all by ourselves? 

I'm sure we're not different than many other organizations where all the energy is in getting approval to buy something and getting it installed. There's not nearly as much energy and it's not nearly as much fun to go back and a year later say: "Did we achieve what we thought we would achieve? Are we using this the way we want to be using it? Is it consistent with how the vendor offers the software package?"

Not super sexy stuff, but that's where you get value. So inflation is just going to drive that to be a more and more important part of what an IT organization has to do.

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